India is the costliest country to buy a PS5. So it makes sense that Sony would send enough PS5s to India, right? Wrong. Here's why.

First off, let's break down that price: ₹49,990. That's 36–37% more than the PS5's US pricing at current foreign exchange rates.

This is exactly the same tax/import duty markup that Sony's then-PlayStation India head had mentioned in 2013. https://www.firstpost.com/tech/blame-indian-taxes-for-rs-39990-price-tag-sony-playstation-india-head-2-3643683.html/amp

And the taxes since 2013 have only gotten higher since the PS4's release. And yet, the PS5's pricing markup from 2013 to now, is the EXACT SAME! Which means that Sony is marking the PS5's sale price in India LESS than the tax markup.

So this does not only mean that the pricing is high in India because of taxes. It also means that Sony is LOSING MONEY on every PS5 sale in India.

"But @IsPS5OutIND!" you might exclaim, "PlayStation is sold at a slight loss everywhere! Consoles make money on software sales!"

Ahh, yes. Let's talk about software sales.

With the PlayStation 5, Sony's first party games are as costly in India as they are elsewhere in the world, give or take. If the rupee falls even a little more, Sony will start making MORE money per game from India than in many other "developed" economies.

So, you might think, that the downstream revenues of the PlayStation 5 are highly valuable for India.

But don't forget one more thing: India taxes not only the PlayStation 5, but also PlayStation 5 GAMES. That's right, digital game sales are taxed at 18% GST.

And this is a tax that Sony is taking the hit for! Which means that the per-user console sale, AND the subsequent software sales, is LESS lucrative for Sony than in other territories!

You might think that "Oh, this is a market where people are willing to spend 50k for PS5, so Sony will serve demand here even if the number of users is low."

But that's incorrect. Sony loses money on consoles, and its profits from game sales are less than other markets.

So not only is Sony losing money in console sales, they're also not making that much money back in PSN game sales. As for the volume of physical game sales, the less said the better.

And let's not forget that India is a geographically big country. Logistics costs a lot, especially when import regulations and taxation is involved.

In such a market, what is the best sales strategy?

The best strategy is one that bypasses local limitations while having global benefits: low taxes, global pricing, and reduced costs per customer.

Even imported PS5 users' game purchases are subject to tax. So how might Sony solve this problem?

Answer: By letting the grey market shine. If Indians buy consoles from other markets and fly them in, Sony doesn't need to pay for warranty, and they also don't have to deal with Indian regulations.

And with consoles so scarce, what other strategy is viable?

This is also the strategy for PS4. Why do you think Sony hasn't had PS4 Pro on sale in India for so long? Or any limited ed. PS4?

It's because their brand value is so strong that those who are interested would rather just get it from abroad in the absence of official supply.

And this is where we fall into the trap that closed ecosystems set for consumers. When you submit to a walled garden, you no longer have the freedom to experience life outside it. Who would want to leave a garden that has God of War: Ragnarok?

Oh, and just a cherry on top of all this: India is among the cheapest country to get PlayStation Plus, one of SIE's biggest cash cows. That's another factor that will matter when Sony decides how many units India gets at launch.